January 5, 2023 - Euro Croatia tackling dirty play - at today's session, the government adopted a conclusion calling on everyone, from retailers to restaurateurs and craftsmen, to return their prices to the level before the conversion to the euro. Prime Minister Andrej Plenković pointed out that such price increases represent dirty play and profiteering.

"We warned there would be a negligible price increase; it was like that elsewhere. But what we are witnessing is something else. This is unjustified, pure profiteering, dirty play, and we will strongly oppose it with the Government's measures in the coming period," the PM said, as reported by 24Sata.

He called on all competent institutions to expose unfair practices from the State Inspectorate and Tax and Customs Administration.

"We will do that, and when I say measures so that there are no dilemmas, I also mean subsidies and other taxes. The government will not sit back and watch this without a reaction, and everyone who thinks that in this situation they can cast a shadow from an extremely positive and useful thing with their irresponsible business policy or harm the strategic success of the state, the government, society and all of us, they will not succeed", he said.

The Prime Minister called on all business entities to distance themselves from those who unjustifiably raised prices.

"With the conclusion of the Government, everyone is invited to immediately revise the prices to those before January 1, 2023, at the end of December. All departments are tasked to strengthen supervision, the Ministry of Economy to take all measures to collect complete and accurate information on price monitoring, the Ministry of Agriculture to collect food and product prices", said Plenković.

He stated that the purpose of the euro is not for someone in a crisis to get rich unjustifiably at the expense of citizens.

"We will not welcome any phenomena that lead to an increase in inflation, but we will sanction and fight against it with all mechanisms to protect consumers and ensure fair business practices," he stressed.

"In this period, all authorities will contribute to uncovering unfair practices. The state inspectorate, and the tax and customs administration, will be given a specific task to act as soon as they see irregularities - said the prime minister and called on everyone to revise the prices and return them to what they were at the end of December - he added.

Minister Davor Filipović presented the Government's measures against price increases.

"All business entities, including credit institutions and other financial service providers, and all those who have raised prices against the law are obliged to revise the retail prices of their goods and services and that they be determined by the price level as of 31 December", said Filipović.

"The inspectorate, tax, customs, ministries, CNB... are tasked to implement increased supervision of entities within their jurisdiction without delay", he said, adding that the Ministry of Economy will monitor prices and offer price comparisons at various entities.

He called on the Ministry of Agriculture to immediately collect the prices of agricultural products.

Chief State Inspector Andrija Mikulić was also present at the Government session and reported that they had intensified monitoring of received consumer complaints. In terms of dual pricing, before introducing the euro, inspectors found 1,744 violations of the law from September to the end of 2022. From January 2 to 4, the inspection was carried out by more than 200 inspections in trade and service industries.

"Bearing that business entities freely set the price, inspections have begun based on the applications received. From January 2 to 4, the inspection carried out over 200 inspections in the area of retail trade, including bakeries and service industries. These were mainly hairdressing services, body care, and maintenance services. According to the first results, an increase in prices was determined. In the shops, a price increase of 3 to 19 percent was recorded for chocolate, baked products, beer, coffee, and chocolate... We will determine if this is unjustified. If this is established, misdemeanor measures will be taken", said Mikulić.

"Most submissions concerned bakeries, hairdressers, and body care services, where price increases have been confirmed. In the shops, some subjects raised prices from 3 to 19 percent for chocolate, bakery products, beer, butter, sour cream, toilet paper, coffee, and other items. If they determine that it was unjustified, in accordance with the law on consumer protection, they will be prohibited from engaging in unfair practices and will be subject to misdemeanor measures. In service activities, the price increase there, unfortunately, ranges from 10 to even 80 percent", said Mikulić.

In the last two days, out of 306 inspections, 96 violations were found, which is 31 percent, and the inspections continue.

For more, make sure to check out our dedicated Lifestyle section.

January 1, 2023 - Croatia officially became the 20^th member of the eurozone, a monetary union member of the European Union (EU), making the Croatian currency and the only legal tender the euro, the second most important world currency.

As Index writes, on the first day of the New Year, Croatia became the 20^th member of the euro area, and the euro became the official Croatian currency and legal tender in Croatia. The previous eurozone expansion took place in 2015 when Lithuania became a member.

Minister of Finance Marko Primorac and CNB Governor Boris Vujčić met in front of CNB. Minister Marko Primorac commented on the introduction of the euro.

"Croatia has joined the circle of the most developed countries in the world. This was by no means an easy process. It took a long time; a number of people made significant efforts," he said. "The euro will provide us with some security in these turbulent times," he said and added that the euro will enable further growth and development.

"Over 95 percent of ATMs are stocked with euros; now the transition process is underway. So we can relax and enjoy ourselves," said Primorac.

"Kuna is going down in history; it served us well."

Then Boris Vujčić took the floor.

"I am thrilled because this year we finished the project that we started five years ago. We created the Eurostrategy then, and I must say that it did not always look like we would be in the Eurozone on January 1, 2023. This is a record timeline; it could not have been faster," he said.

"Croatia is the 20^th country that uses the second most important currency in the world," said Vujčić and listed the advantages of the euro. "It is not a magic wand that will solve many of our problems, but it will help us be a richer country," Vujčić said.

"Kuna is going down in history," Vujčić said. "The kuna served us very well. It was stable since we introduced the kuna, we had low inflation, it will go down in history with pride, we will only remember it for the good," he said.

After that, at a nearby ATM, Minister Primorac withdrew the first euros from the ATM.

For more, make sure to check out our dedicated Lifestyle section.

December 13, 2022 - Euro Croatia: from the 1st of January 2023, the official currency in Croatia will be the euro. In the first two weeks of next year, Croatian citizens will be able to pay their bills in kuna, regardless of whether they are issued in kuna or euros.

As Poslovni reports, as soon as we enter the New Year, the official currency in Croatia becomes the euro, which means that payments should be made in euros, but citizens are given a deadline for adjustment in the first two weeks of 2023, during which they can still pay in kuna. The change, however, will be in euros during this transition period. Card payment is recommended as much as possible.

From January 15, the euro will be the only accepted currency, and the kuna will definitely be out of circulation. Regarding the payment of utilities, for example, the Croatian Banking Association states that the currency specified on the invoices should be used to pay.

"Utility bills for December will be issued in January 2023 and will be in euros. For all payment slips that citizens have received in advance and on which the amount of payment is in kuna, and will be paid after the introduction of the euro, the bank is obliged to make the payment in euro in the amount corresponding to the amount of kuna specified on the payment order. The bank will act in this way until July 1 next year," HUB told Novi list.

The Financial Agency (Fina) confirmed yesterday that the above applies to Fina as well.

"After January 1 and until June 30, 2023, Fina will receive orders issued in kuna and will execute them in euros, with the application of the conversion rate. Also, during the dual circulation period, i.e. in the first two weeks of January 2023, citizens can pay orders in kuna, regardless of whether they are issued in kuna or euros," explains Fina.

According to this, it turns out that the criterion is the moment in which the citizens decide to pay: if they pay by January 14, that can be done using the Croatian kuna, and if it's after that, regardless of when the bill was issued and in which currency, it must be in euros. If the citizens do not have euros, they can exchange kuna for euros in several ways. As far as the conversion of kuna into euros is concerned, in Croatia, the bank association points out that throughout 2023, banks, Fina and Croatian Post will exchange up to 100 kuna notes and 100 kuna coins per transaction at the counters for free, to all citizens at the same exchange rate.

For more, make sure to check out our dedicated Lifestyle section.

December 1, 2022 - Tihomir Mavricek, executive director of the Cash Sector of the CNB, spoke about the introduction of the euro in Croatia for the N1 television. One month before the introduction of the euro as an official means of payment in the Republic of Croatia, citizens were able to purchase initial packages of euro coins.

Poslovni reports. "The initial package of euro coins contains 33 coins, three coins of 2 and 1 euro, 5 of 20, 50 and 10 cents, 3 of 5 cents, 4 of 2 cents, and 5 of 1 cent. The total value is 13.28 euros, and our citizens will be able to get it for exactly one hundred kunas in all branches of banks, post offices, and Fina", said Mavricek.

"They must not be used for payment until January 1, 2023," he emphasized for N1.

He also clarified why these euro coins are not allowed to be used by citizens and why they would not be valid in, for example, Slovenia. With the first of January, the euro becomes a means of payment.

"Until then, citizens could have problems if they pay with these coins, and they could also receive a fine because it is not a legal means of payment until then," said Mavricek.

He states that this is one of the last steps to prepare for introducing the euro in Croatia. He also referred to euro banknotes. "All the necessary quantities of euro banknotes are in our vaults; they are already being distributed to the banks."

He added that ATMs would be adjusted in December to dispense euros from January. "From January 15, the entire network of ATMs will dispense euros."

Mavricek mentioned another critical change that will facilitate the transition to the euro. "The CNB has agreed with the banks that from December 15, the fee for withdrawing banknotes from ATMs of other banks will be abolished, for kuna until the end of December, and for euros from January 1 to 15."

What will happen to kuna coins after the changeover to the euro?

"From the first of October, when we urged our citizens to deposit extra kuna in banks, coins started to arrive, and they will be taken care of safely. This means that in three years, they will be sold as secondary raw materials when they cease to be a means of payment. It is a huge logistical task, and it takes time," Mavricek said, adding that kuna coins can also be recycled into euros.

"We will process and cut the banknotes on the banknote processing systems, and then the rest will be taken care of," he concluded.

For more, make sure to check out our dedicated Lifestyle section.

November 24, 2022 - Euro in Croatia: on the first day of 2023, the euro will become the official currency in Croatia. Paying in kuna (only in cash) will be possible until January 14. Preparations for the introduction of the euro in Croatia from January 1, 2023, are proceeding without any problems and according to plan, as was pointed out this week at the session of the National Council for the introduction of the euro.

As Poslovni / N1 write, Croatian citizens are already mostly familiar with what awaits them from the first of January. One of the questions that remain, however, is what will happen to the utility bills for December, which will arrive in January.

The utility bills for the December consumption will be issued in January 2023 and will be expressed in euros, according to the Croatian Association of Bankers.

For all payment slips that the citizens receive in advance and on which the amount of payment is in kuna, and they pay them after the introduction of the euro, the bank is obliged to make payment in euro in the amount corresponding to the amount of kuna specified on the payment order. The bank will act this way until July 1, 2023, says the Croatian Association of Bankers.

It is crucial to emphasize, they remind, that from the 5^th of September until the 31^st of December 2022, the dual pricing continues. This means that the final amount of the bill will be in HRK and EUR with the fixed conversion rate specified.

There are exceptions to that:

• value shown for prepaid electronic communication services (prepaid vouchers)
• the value and amount stated on the payment order based on an invoice or other individual document, i.e. based on the displayed price
• the value shown on cards for public payphones
• the value printed on the SIM card packaging

For more, make sure to check out our dedicated Lifestyle section.

ZAGREB, 11 July 2022 - The Ministry of Economy and Sustainable Development on Monday released the code of ethics for the process of switching to the euro at the start of 2023, and all business entities that interact with consumers are called to join the code.

Croatia will enter the euro area on 1 January 2023 after it met all the convergence criteria, the ministry recalls.

The ministry notes that the transition from the national currency to the euro is an important topic that raises many questions, and definitely, a part of consumers are also concerned about possible price rises.

The ethical code has been compiled in a bid to create a safe environment for consumes and to make sure that the changeover from the kuna to the euro will be conducted in a reliable and transparent manner.

In December 2020, the Croatian government and the national bank (HNB) announced the release of an ethical code for the introduction of the euro in the document titled "the National Euro Changeover Plan".

The document reads that "retailers and other service providers will be invited to abide by the ethical code for the introduction of the euro, and will be able to participate in the campaign organised by the Ministry of Economy and Sustainable Development in cooperation with business associations.

For more, check out our politics section.

February 11, 2022 – Considerable controversy has arisen in Croatia this week after artist Stjepan Pranjković was accused of plagiarising a winning proposal for the country's future Euro coin design of the Kuna. 

The graphic designer became the object of public scrutiny when members of the public began pointing out similarities between his composition and a photo of a marten taken by British photographer Iain H Leach. Pranjković has since withdrawn the proposal, leaving officials with the task of selecting a new motif before the coins enter circulation in January of next year.

Squabbling aside, I want to seize this opportunity to draw your attention to the real star of this somewhat dramatic narrative, our fuzzy friend, the kuna.

Many people are familiar with this mischievous forest creature and maybe understand why he lends his name to the national currency. However, if you're like me, you may recognize that gaps remain in your kuna-knowledge. If so, keep reading.

In biologists' speak, kuna (martens) constitute the genus Martes within the family Mustelidae, a group that includes more familiar carnivores like weasels, otters, badgers, and wolverines. There are many species of marten, ranging throughout Europe, Asia, and North America. The star of the current coin debacle is most likely a European pine marten (Martes martes), a common species across Europe, including in Croatia and in Leach's native Great Britain.

The photo in question shows the kuna climbing on a branch. It comes as no surprise then that pine martens are arboreal, spending much of their time maneuvering amongst treetops. These agile predators use their semi-retractable claws to climb between branches, including those of the pines from which they take their name. These claws also come in handy when hunting and foraging their favourite foods: small mammals, birds, insects, fruits, and carrion… delicious! While not most appetizing to the average palate, scientists attribute the appetites of pine martens to a population reduction of the invasive grey squirrel in certain regions across Europe. While many view this fuzzy creature as a pest, this example demonstrates the valuable role pine martens play in their native habitat. Fortunately, despite pressure from deforestation and illegal hunting, the European pine marten is still classified as least concern by the International Union for Conservation of Nature.

So, how did this tree climbing, squirrel eating, weasel cousin end up at the centre of a national debate on currency design? Well, like most things in Croatia, the kuna goes back several centuries and has a complicated but interesting backstory. To understand, we must go back to medieval Croatia, a time when marten pelts were traded as money. Flash to the 13th century, the Croatian Viceroys distributed marten-adorned silver coins called banovac. However, the currency did not last long. As Croatia lost its autonomy to its union with larger and more powerful Hungary, the banovac disappeared in the following century. But this would not be the last time the world would hear the word kuna.

As I'm sure you are all aware, Croatian's are a stubborn and traditionalistic people. (I say this out of love and from personal experience). Thus, it was only natural that upon independence, Croatian leaders designated the kuna as the state currency on May 30, 1994. Ever since, the kuna has served both practically and symbolically as an embodiment of Croatian custom, identity, and national pride.

As is so often the case, it appears that history is set to repeat itself. With the adoption of the Euro imminent, the renaissance of the kuna is coming to an end. I don't want to criticize the government as it moves to bring the country towards a more integrated future. Croatia has much to gain from establishing the Euro within its borders. Nevertheless, by dawning this historical perspective, one can glean additional insight into why so many are hesitant about the process.

For this reason, it truly is a shame that the coin depicting the kuna, a consecrated emblem of Croatian independence, has become ensnared in public dissension. Of course, the choice to withdraw the submission and protect intellectual property was correct. But, personally, I hope that officials can find a way to reincorporate the kuna into the Croatian Euro roster. That way, Croatians can continue to trade furs for beer and wine while sharing this tradition with the rest of the European community.

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January the 29th, 2021 - Boris Vujcic, the Croatian National Bank's Governor, has been awarded for the Croatian monetary reform policy which enabled the stability of the Croatian kuna against the euro.

As Poslovni Dnevnik/Ana Blaskovic writes, CNB Governor Boris Vujcic has received the Lamfalussy Award for 2021, named after the "father of the euro" Baron Alexandre Lamfalussy, of the Hungarian National Bank.

Vujcic was awarded for the Croatian monetary reform policy, which enabled the stability of the kuna against the euro, which subsequently enabled Croatia to join the European Exchange Rate Mechanism back during the summer, and they also state his key role as deputy chief negotiator with the European Union (EU).

In his thanks for this recognition, Vujcic focused his speech on the issue of monetary policy in emerging markets when the largest central banks resort to unconventional instruments.

With humorous associations to the novel A Hitchhiker’s Guide to the Galaxy and Monty Python, he emphasised the extremely low real interest rates that are likely to become permanent features of economies.

"The main reason why emerging market countries started implementing APP from today's perspective is obvious - these programmes were successful," said Vujcic, recalling that the CNB made one of the largest buyouts in emerging markets last year, about 5.5% of the country's GDP, which is only about half the amount of the ECB programme in that year”.

He added that Croatia's conclusion of a currency swap agreement with the ECB and its entry into ERM II also helped stabilise the market. He pointed out that the recent development of the monetary policy regime in emerging markets “cannot be taken for granted” because they do not issue reserve currencies and heavily depend on foreign borrowing.

The Belgian economist and central banker Lamfalussy was born in Hungary in 1929. He participated in the work of the Delors Commission, which laid down the foundations of the European Economic and Monetary Union, with a prominent role in founding the ECB and creating regulation of the European financial system. He died in 2015, the Lamfalussy Prize was established back in 2014 and is awarded for outstanding professional achievements and life achievements of individuals that affect the work of central banks and the functioning of the international financial system.

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As Marina Klepo/Novac writes on the 14th of January, 2020, in the second half of this year, with parliamentary elections expected, the Croatian Government hopes to receive a call from the competent European institutions that Croatia can enter the European Exchange Rate Mechanism (ERM2), a so-called ''waiting room'' in which each EU member state must spend at least two years before Eurozone entry and the adoption of the euro as an official currency.

If Croatia implements all of the measures it has committed itself to, at least according to the European Commission Vice-President for the Euro and Social Dialogue, Valdis Dombrovskis, Croatia could achieve this goal "as early as the second half of 2020".

Along with the letter of intent, in July last year, the Croatian Government also sent a detailed follow-up action plan of nineteen measures and activities it intends to implement in order to enter ERM2, and thus be granted Eurozone entry eventually. It seems that the passage of time in fulfilling these obligations is quite solid.

According to Zvonimir Savic, coordinator of activities related to Croatia's Eurozone entry, the pace of implementation of the listed measures is "quite good". Of the nineteen measures that involved nine institutions, just over four have been fully implemented so far. The implementation of twelve of them is underway, ie, they're all at some stage of implementation.

''Given that several of them are related to the passing of legislation in Parliament, it takes a little more time. But if all goes to plan we expect that all measures will be fulfilled in April, and in May at the latest,'' says Savic. He explains that Croatia is expected to inform the European Commission when it fulfills all nineteen measures.

It has been agreed with institutions such as the European Commission (EC), Eurostat and the European Central Bank (ECB) that what the government proposes in the action plan must absolutely be fulfilled for the country's future Eurozone entry. Although these promises don't really seem particularly demanding, because many measures, such as the law on the rights of officials, were already on the agenda, Savic added that some of them were quite complex. In any case, their timely implementation is of paramount importance for the government at this point.

When it has completed its ''homework'', the government will inform the Eurogroup, the representatives of all existing Eurozone member states, and thereby request participation in the exchange rate mechanism. However, the decision is up to them, and they will consider Croatia's application and decide when Croatia can enter ERM2.

''It's realistic to expect a response from the Eurogroup in the second half of next year. They need to confirm that we've fulfilled the measures and that, for example, from January the 1st, 2021, Croatia enters ERM2,'' Savic notes.

Finance Minister Zdravko Maric also stresses that he expects that all measures included in the action plan will be fulfilled on time, and the Croatian National Bank's Governor Boris Vujcic is also satisfied with the way things are going so far when it comes to preparations and fulfilling obligations for this step of Eurozone entry approval.

The action plan consists of six areas: bank rehabilitation, the macroprudential framework, anti-money laundering, statistics, public sector management, and Croatia's business environment. In the past month, many of the laws that need to be passed have come under public scrutiny. Among these are the Law on Official Statistics, the Law on Credit Institutions, the Law on the Recovery of Credit Institutions, the Law on the Croatian National Bank (CNB/HNB), the Law on Confirmation of Agreements and the Unification of Contributions to the Single Resolution Fund, and so on.

Among other things, these legal changes imply that the CNB, for example, will have additional macro-prudential measures and, where necessary, be able to prescribe them to preserve the stability of the financial system.

The amendments to the law on credit institutions also regulate the exchange of information on the creditworthiness of retail clients. The Croatian Registry of Credit Obligations (HROK), established by banks fifteen years ago, ceased to operate in mid-2018 due to the application of a general data protection (GDPR) regulation in the European Union. In line with the new legal provisions, it is now expected that the exchange of data will start again in the middle of this year.

Additionally, the NRS benchmark interest rate, which serves as an index for determining the variable portion of interest rate on consumer loans, will be calculated and published by the CNB in ​​the future, and not by the Croatian Banking Association.

Much like the Ministry of Finance and the CNB, who have been very up-to-date on the work of preparing for Croatia's eventual Eurozone entry, the Ministry of Economy, for example, has introduced an electronic start-up business, and by March it must present a plan to reduce the massive, draconian administrative burdens placed on businesses in Croatia. The government should then adopt it.

Greater activity is also expected from the Ministry of State Property, which by April must define possible fluctuations and announce tenders for the sale of state shares in at least 90 companies. One tender has now been announced and regards the sale of stakes in as many as thirty companies.

If Croatia joins ERM2 early next year, the national currency will be pegged to the euro, a mid-exchange rate will be established and the Maastricht criteria will all be met.

Member states' experiences and length of stay within the ERM2 mechanism have tended to all be very different, ranging from 2.5 years (Slovenia) to over ten years (Lithuania), indicating that joining the ERM2 does not have to lead to the introduction of the euro in the short term. Only the United Kingdom has an opt-out from Eurozone entry.

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ZAGREB, January 8, 2019 - The European Commission Vice President responsible for the Euro and Social Dialogue, Valdis Domobrovskis, said on Tuesday that Croatia was working hard on the introduction of euro as its official currency, and that the process of Croatia's admission to the 19-strong euro area would be similar to the process involving Bulgaria that had already sent a letter of intent.

Croatia is working seriously and intensively to create the prerequisites for its admission to the euro area, Latvian Dombrovkis told the press on Tuesday in Riga on the margins of a conference on Latvia's five years in the euro area.

In 2019, Latvia is celebrating five years in the euro area, and it will also be twenty years since the European citizens can pay in euros.

The two-day conference in the Latvian capital city was organised by the European Commission. Dombrovskis recalled that the expansion of the euro area was an open procedure based on rules, and that all EU member-states, except Denmark and Great Britain, were obliged to introduce the euro as their official currency. There are no deadlines for the obligatory adoption of the euro as the sole legal tender in an EU member-state.

The European Commission supports member-states' efforts to introduce the euro, and provides not only political but also the necessary technical and financial support, the Commissioner said.

He said that the next financial perspective would also include a programme of financial support to the reforms carried out by EU member states aspiring to join the euro area membership.

Croatia and Bulgaria have expressed their intention to join the euro area five years after the last round of its expansion.

Aspirants are expected to enter the European Exchange Rate Mechanism II (ERM II) as well as the Single Supervisory Mechanism (SSM). The SSM, which refers to the system of banking supervision in Europe, comprises the European Central Bank and the national supervisory authorities of the participating countries.

The ECB thus can supervise local financial institutions and the process implies the implementation of legislative, operative and technical preparations, all of which takes time.

Croatia will likely enter the ERM II during 2020, a year after the submission of its letter of intent.

Bulgaria, which in 2018 sent a letter to the ECB and other European institutions about its plan to join the ERM II, will probably enter the ERM II in mid-2019, according to Dombrovskis.

After that, it will take at least three years for Bulgaria to adopt the euro provided that Sofia meets all the criteria: two years in the Exchange Rate Mechanism and a minimum one year for the evaluation of the aspirant's achievements and for practical preparations for the replacement of its currency lev with the euro.

More news on the Croatian monetary policy can be found in our Business section.